Termination of Lease Agreements – What Are the Rules?
Lease agreements are a common legal document that is signed between a landlord and tenant, whether in a residential or business rental capacity. Like any contract, a lease agreement can be intimidating and confusing.
However, these agreements are not designed to be contractual traps. They should be straightforward and concise when detailing the particulars of a rental agreement.
It is important to have a lease agreement in order to solve issues prior to them causing legal complications – which usually occur when one party decides to terminate the contract.
What is a Lease Agreement?
A lease agreement is a legal contract between a landlord and a tenant. It outlines details such as:
- Obligations and responsibilities of the landlord.
- Obligations and responsibilities of the tenant.
- Length of the lease.
- Amount of monthly rent.
- Amenities, properties, and appliances included with the rent.
The lease agreement is a legal and binding contract that can be used by the court if any legal issues arise between the landlord and the tenant.
Most lease agreements are written. However, some landlords and tenants settle on a verbal lease agreement. In this case, the tenant is protected by tenants-rights laws governed by the Residential Tenancies Act. Even without a written contract, there are basic obligations and responsibilities the landlord is responsible for.
When signing a lease, it is important to make sure you understand what it is you are agreeing to. Should you feel confused by the details of the lease, ask the landlord to clarify or have a professional lawyer review the lease before signing.
The point of a lease agreement is to prevent any disputes from happening. Should a dispute between a landlord and tenant happen, however, the lease also exists to protect the rights of both involved parties.
Ending a Lease Agreement
In the province of Alberta, landlords and tenants must meet specific conditions in order to successfully end a lease agreement.
Fixed-Term and Periodic Agreement
Ending a lease agreement can depend entirely upon whether the lease is a fixed-term or periodic agreement.
During fixed-term lease agreement, in which a tenant is obligated to stay and pay rent for a fixed amount of time (usually a year), both the tenant and landlord must wait until the end of the agreed-upon time period before ending the lease agreement.
Ending this type of agreement is at the discretion of the landlord and tenant and, unless the lease agreement has been violated, must be agreed upon by both parties.
A periodic agreement has no end date and continues until either the landlord or tenant gives written notice to end it. This applies to those who rent on a month-to-month basis.
When Can a Landlord End a Lease Agreement?
A landlord can end a periodic lease agreement in the following situations:
- The landlord or a relative of the landlord wants to move in.
- The landlord is selling the rental property and the buyer (or relative) want to move in.
- The landlord intends to demolish the rental property.
- The landlord intends to use or rent the rental property for a non-residential purpose.
In any of these situations, the landlord is only required to provide notice of eviction depending on the nature of the agreement (for example, a month-to-month lease agreement would require 20 days).
The only exception in this case is if the landlord plans to carry out major renovations on the rental unit (not including minor renovations such as painting, floor replacement or routine maintenance).
The landlord then must provide the tenant with one year’s notice to terminate the lease agreement.
When Can a Tenant End a Lease Agreement?
In a periodic lease agreement, a tenant cannot move out without providing proper notice.
When tenants do not give proper notice, they may be responsible for paying rent until the date the unit is rented to another tenant or the earliest termination date if notice had been given – whichever date occurs first.
Otherwise, tenants can end a lease agreement under the following circumstances:
- The tenant and landlord agree to end the lease agreement.
- The tenant finds someone to take over the lease agreement (not sublet).
- The Residential Tenancy Dispute Resolution Service (RTDRS) or courts issue an order ending the lease agreement early.
- The tenant is a victim of sexual or domestic abuse.
If you are a tenant and unsure of whether or not you can safely end your lease agreement, please contact our expert lawyers at Heritage Law to answer your questions.
Ending a Lease Agreement as a Business
If you are a business leasing property, you need to be aware of your contract terms. Much like a residential rental, there may be only specific conditions under which you can terminate a lease agreement.
Most basic lease agreements remain legally valid even if your business has closed unless you have negotiated a lease termination clause that depends upon a business closure.
Should you end the lease agreement early, you may face early termination penalties and fees. These compensate the individual leasing the property during the time it takes to find a new business tenant.
When considering whether or not to break your business lease agreement, you need to compare the penalties and fees to the cost of paying out the remainder of your lease.
If you find yourself in a situation in which you need to break a lease agreement, either as a residential or business tenant, please contact Heritage Law today for more information.
We can review your agreement and advise you on the steps to take.